Russian Energy Dominance in the European Union
On March 6 in Berlin, the German Marshall Fund, the German Council on Foreign Relations, and the London-based Russia Foundation brought together leading experts on energy policy to discuss European energy security, just two days before the EU Council summit in Brussels.
Jörg Himmelreich, senior transatlantic fellow at GMF; Holger Krawinkel, director of the Federation of German Consumer Organizations (GCFR); Frank Umbach member of the GCFR; David Clark, director of Russia Foundation; and Alan Riley, research fellow at the Center for European Policy Studies in Brussels all urged the European Union to develop new strategies to assuage fossil-fuel dependence on an increasingly antagonistic Russia.
Himmelreich noted that, unlike most other Western countries, Germany has only recently developed concern over Russian energy dependence.
He continued that Russian government-controlled Gazprom is seizing the opportunity to expand westward as privatization and liberalization of the EU energy economy from former state-run institutions forces greater international competition. Gazprom is using this shift to its advantage. Established in energy-rich Russia and keeping its own costs low through government subsidization, the fuel giant strives to enter Europe under free trade among the pricier privately-owned distribution networks while denying Western energy companies similar reciprocal access to Russian state-owned transport networks, Himmelreich said.
He added that Russia is manipulating energy markets by rapidly increasing prices in order to exert greater political pressure in the region and to force developing EU and Russian neighbor states to sell equity in their own networks to Gazprom.
Himmelreich made the following recommendations to curb Russian energy hegemony. Primarily, the European Union must develop a common, concerted energy policy instead of bilateral energy contracts between separate EU member states and Russia that permit Russia to play the strategic interests of individual EU states against each other tactically. Furthermore, it is crucial to seek out other energy sources, including accelerated improvements in the transportation of liquefied natural gas (LNG) and adequate port facilities to ensure a reliable LNG supply to Germany. Energy demand in Europe will continue to grow in the coming years, which will inevitably lead to the necessity to diversify energy sources. Because of EU dependence on fossil energy, the European Commission should play an important and active role in the coordination of a European Energy Security task force, particularly if the EC is about to control energy sales to European networks and the sale of formerly state-owned companies to non-EU countries. The EU will remain heavily dependent on Russian energy supplies. That is why a more harmonized EU-Russia approach that soberly addresses challenges, such as EU energy dependence on Russia, is the best precondition for cooperation. The economic influence of an EU 27 that speaks in unison will be significant to Russia as well, Himmelreich concluded.
Alan Riley elaborated on the political aims of Russian energy policy. He said that energy policy normally develops out of considerations of efficiency and output, but Russia uses natural resources to exercise political control and to reestablish some of Russia's diminished might. Riley emphasized that Russian officials have a very conservative foreign policy vision. Postmodern European political thought generally presumes the acceptance of trans-national regulations and merging interests that is not prevalent in Russia. Rather, Russia views politics in terms of geopolitical competition in Eastern Europe, where the Kremlin regards the European Union as a political rival. In Riley's opinion, the EU should establish new infrastructure and pipelines that bypass Russia altogether. Riley criticized what he called the power broking that France and Germany are doing with Russia, that such political behavior is a betrayal of the EU and its achievements.
Frank Umbach emphasized that Russia is no longer a reliable partner due to the re-nationalization of the Russian energy sector and its increasing use of energy as a political tool.
David Clark concentrated on the question of the "Nord Stream" project, a northern European gas pipeline that would run from Russia to Germany under the Baltic Sea. According to Clark, the costs of this project will be at least three to four times higher than building pipelines on land. He also pointed out that in addition to the construction costs, high transmission costs will ensue. An answer to this challenge would be the liberalization of the gas market and pinpointing alternative sources of supply. Clark also said that expensive and wasteful infrastructure will lead to a considerable increase in energy prices passed on to German consumers.
The last speaker, Holger Krawinkel, focused on the increasing energy costs. He also spoke about how energy foreign policy should be interrelated with domestic energy policy. In addition, Krawinkel raised the question of alternative methods of power generation.